When a well-known growth investor decides to trim her position in a stock, investors sit up and take note.
Prior to the start of this week, Tempus AI (TEM -2.40%) stock had locked in a 161% gain since the start of the year — an impressive performance for the healthcare company that’s pioneering artificial intelligence (AI) solutions for improving patient outcomes. This week, however, Main Street noted a well-known investor’s decision to trim her position in Tempus AI stock, and the stock plunged.
According to data provided by S&P Global Market Intelligence, Tempus AI stock had fallen 12.4% from the end of trading last Friday through the close of Thursday’s market session.
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Ark Invest decides it’s time to reduce its position in Tempus AI
Representing significant positions in more than one of Ark Invest’s exchange-traded funds (ETFs), Tempus AI is ending the week with a smaller weighting in the ARK Innovation ETF (ARKK -2.19%). On Tuesday, Ark Invest trimmed the Tempus AI position in the ARK Innovation ETF by 62,352 shares, a transaction valued at about $5.2 million.
The decision to reduce the weighting of Tempus AI follows soon after the company announced it had received 510(k) clearance from the U.S. Food and Drug Administration (FDA) for its RNA-based Tempus xR IVD device — a tool intended to support drug development programs.
While the Cathie Wood-led ETF reduced its position in Tempus AI, the stock still retains a significant weighting in the ARK Genomic Revolution ETF, where it’s the largest position with a 10.7% weighting as of the end of trading on Thursday.
Should AI investors follow suit and reduce their positions in Tempus AI?
Although investors may be disconcerted to see the ARK Innovation ETF reduce its Tempus AI position, it’s worth noting that the AI stock still holds the pole position in the ARK Genomic Revolution ETF, so it’s clear Cathie Wood isn’t eschewing the stock completely.
Ark Invest ETFs frequently buy and sell stocks, and it wouldn’t be surprising if the fund chooses to buy Tempus AI stock again if the stock drops much further. If you were bullish on Tempus AI stock yesterday, nothing should change today.
Scott Levine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.